With the New Year now a month old, newer and more powerful ransomware attacks and threats are already emerging stressing the need for organisations to further strengthen their cybersecurity and purchase cyber insurance if they haven’t already.
With this in mind, Willis Towers Watson, in a release published by the Insurance Brokers Association of New Zealand, has outlined the top cyber insurance trends to watch for in 2018.
The top five trends that can be beneficial to brokers and to the clients they serve include:
1. Total annual cyber premiums will continue to climb as more companies seek coverage
According to the report, global premiums, which were around US$2.5 billion in 2017, will continue to rise and are expected to reach US$10 billion by 2020. For example, the WannaCry and NotPetya attacks cut across industries and regions that previously weren’t considered as having significant cyber exposure. Given the size, scale and financial and reputational impact of recent cyber incidents, expect those sitting on the sidelines to give serious consideration to purchasing cyber insurance.
2. Capacity will keep up with rising demand, helping keep rates in check
As demand for coverage increases, the “supply of capacity is more than keeping up,” the report noted, with new carriers and additional capacity entering the marketplace. Additional capacity is coming from the US, London, Bermuda and Asian markets, which are providing limits of up to US$600 million (per risk) in some cases.
Despite a string of high profile breaches, cyber insurance program renewals for both primary and excess cover are averaging only single-digit rate increases. Experts forecast rate increases of up to 5% for 2018.
3. Carriers will scrutinise risks, rewarding those with the most robust cybersecurity programs
Underscoring the importance of a comprehensive cyber risk management program, certain carriers will lower premiums for organisations that have demonstrated increased levels of security and internal policy controls.
4. Demand for coverage will shift
While demand has largely been US-driven, the evolution in cyberattack methods, combined with increasing privacy regulations in the European Union and China, means the global cyber insurance market is poised for explosive growth.
5. Coverage will expand
Willis Towers Watson said it expects coverage to continuously expand as more carriers address gaps in property, general liability and special crime coverage to include perils arising from cyber risk. Some insurers are beginning to blend cyber and property coverages. The firm said it also sees an expansion of cyber coverage in general - examples include explicit grants of coverage for ransomware and social engineering and expanded cyberterrorism coverage to include nation-state attacks.
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